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What future for broadcast mobile TV?

Nowadays operators and media players are looking for common revenue opportunities. In the last years they have been collaborating through the launch of many new TV services, such as IPTV and mobile TV. In research for higher quality mobile TV experience, a new trend is up with broadcast mobile TV.

Forecasters argue that this market should explode in the next 2 years, but the first services launched in Japan, Korea, USA and western Europe are experiencing difficulties to become profitable. With the knowledge of these first experiences, players involved in the development of upcoming European services need to make key decisions for the future.

A new approach So far most mobile TV services available are provided through common mobile networks such as 2,5G or 3G. The user gets TV service delivered to its terminal thanks to unicast transmission, which means that a specific link is created everytime the user wants to use the service. Unicast mobile TV should benefit from improved quality thanks to forthcoming mobile network technology called 4G or LTE (Long Term Evolution), providing increased capacity broadband.
Broadcast mobile TV technically differs from ‘traditional’ cellular-based mobile TV as it uses a dedicated broadcast network in a similar way to Digital Video Broadcast networks such as French TNT. The main interest for this technology lies in higher definition experience and improved service continuity.

Broadcast mobile TV as a high potential market competing with next generation cellular networks
According to ScreenDigest, mobile TV (both cellular-based and broadcast) should pull more revenues than mobile music and mobile games industries combined thanks to 4,4 billion euros of revenues on the global market in 2011, and 1 billion euros in Europe The market size should rapidly become substantial as mobile TV could cover half a billion users in the next five years, says Cantab Wireless. ScreenDigest experts also argue that broadcast mobile TV will become the leading solution with 60% market share in 2011, but it might be threatened by forthcoming LTE networks, that should be operational from 2012.

Mobile TV revenues forecasts in billion euros(source: Screen Digest 2007)
Convergence between telcos and the medias These promising figures are appealing both for telecom and media players. On one hand, TV broadcasters have to deal with a more and more competitive environment and a TV advertising market that reached maturity. For example in France, TV advertising investments fell down by 4,5 % in 2008 (estimation by Hersant Media), leading media groups to diversify their businesses toward new channels. On the other hand mobile operators are developing initiatives to deliver value added services to their customers and create new revenues above ‘traditional’ voice services. The collaboration between French operator SFR and TV broadcaster MTV – including dedicated contract, phone and MTV content – brings us an example of a successful collaborative offer as it reached 1 million subscriptions.
Difficulties to reach cost effective solutions By contrast with successful cellular-based solutions, broadcast solutions need new spectrum allocation and dedicated infrastructure, which requires big investments. In France the cost for the chosen DVB-H infrastructure is estimated at about 60 million euros a year for the first 10 years to cover 1/3 of the territory. This aspect raises hesitations among operators, media players and infrastructure providers wondering about how to share this investment.

In addition, existing business models do not meet success so far. The fee-based model set up in Italy, Germany and USA relies on stable subscription revenues, but it reaches a narrow audience because of a too high price for a service that differs from consumers’ habits. Besides this the free-to-air model (financed by advertising) adopted in Asia generates audience growth but poor revenue performance. For example in Korea, the service offered by TV Channel T-DMD reached 10.3 million users, but the revenue generated is far too low (6 million USD) compared to operating costs (40 million USD).

Synchronization and content strategies as key success factors
One key question to make broadcast mobile TV a successful business is how to coordinate players driven by different interests. Operators’ strength lies on knowledge in mobile business models. A fee-based model would give them market leadership through the benefit of contracts subscriptions they provide. TV broadcasters’ strength is rather based on established relationships with content producers. A free-to-air model would give them an opportunity to get direct profits from advertising.

In Austria the regulator KommAutria required players to sign cooperative agreements and elaborated an incentive free offer distributed for 6 months to encourage users’ subscription. Today this ‘cooperative model’ is investigated with scrutiny by players willing to invest the market.
Another key success factor is providing contents that meet customers’ expectations, which raises different positions. In France government representatives advice programs to be different from traditional TV whereas other approaches argue customers expect similar programs whatever the terminal is.
A mid term vision.

Broadcast mobile TV should rapidly attract a rising number of users whereas operators, broadcasters as well as content owners may not benefit from significant revenues before 2 or 3 years. However this topic requires quick action from players in order to start building up a customer base which will later become mature enough to move toward a subscription model before LTE (4G) networks become operational. Operators not investing now in this market will soon tackle with the risk of missing potential benefits that could be reached through a business model based on a combination of contracts and advertising profits. Above any technological choice (broadcast vs cellular networks) the future of mobile TV is a matter of business model decision.